Archive for August, 2007

Subject: Land use and rent (land and natural resources) revisted OR geolibertarianism by other means — Part 3: land value tax (lvt) — problems

I cannot help but think that land-value taxation is not without its problems.

It attacks land owners in a given jurisdiction but does nothing about what goes on outside a given jurisdiction. In other words, it puts some land owners at a disadvantage by changing the rules in the middle of the game for SOME land owners.

A land value tax does nothing about natural resources. Not only is natural resources probably more important, but a given jurisdiction may be resource poor. Indeed, those jurisdictions that are resource-rich are at such an advanatge that they have no incentive to be pro-growth. They can be lazy, corrupt, hypocritical, and incompetent. All they need to do if they run into trouble is another resource extraction fix. Look at the third world and Middle East for prime examples of this problem. Thanks to privatization things have only gotten worse in the Middle East and now there is a “database” — The Database / Al Qaeda which is MAD. The only jurisdictions that might consider geolibertarianism are those that don’t have the resources to begin with.

It should now be clear that Whatever policy is implimented, it must have a far reach. It must undo the effects of privatizing the surface area and natural resources. Privatized surface area and natural resources is here to stay — work around it!

Subject: Land use and rent (land and natural resources) revisted OR geolibertarianism by other means — Part 2: current system — effects

Effects of privatizing land and natural resources should be self-evident.

Any benefits that accrue to the masses (indeed, if any) go to the current generation, future generations are ripped-off, swindled out of their rightful inheritance.

Wages are depressed since artificially impoverished (through swindling) people are in a weaker negotiating position.

Since all most people get are artificially deflated wages they live at or near subsistence. As a result they aren’t in a realistic position to make money with money. This makes it ridiculously easy for those who have the rent (land and natural resources) to corner capital as well. As a result rates of return on capital are kept artificially high. Making things worse is that those who have been actively impoverished are undesirable mates, esp the dominate sex which in the case of Homo dolosus dolosus (Latin for crafty, cunning, sly, deceitful, (wise, wise my ass)).

Those stuck with slumlords aren’t in a position to negotiate either. They don’t have cars so they can move to places where public transport is too poor to be of practical use even if it is available. Any money they come into goes into the slumlords’ pockets and drives up land prices.

So policies which raise wages and depress returns on investment are good things. Ideally, rates are forced down without expanding the money supply faster than the rate of economic growth. It may be best to set the value of gold high and require high levels of backing that are slowly lowered if necessary to allow high economic growth which requires that deflation not be too severe. I see today’s rates of economic growth as being too slow. Trading inflation (even financial asset inflation) for higher economic growth is a false trade-off. The problems are overconsumption, underinvestment, and often (especially during depressions) lack of ingenuity to prevent underinvestment. The root case of (at least some) depressions is lack of ingenuity rather than the apparent underconsumption.

Subject: Land use and rent (land and natural resources) revisted OR geolibertarianism by other means — Part 1: current system — advantages

I’ve been thinking a lot about this one lately. Given the mobility of finanacial “capital” and the fixed-source nature of rent (land and natural resources) (plus the fact that surface area cannot be moved and is difficult/expensive to make) I wonder about the workability of taxes on land and natural resources. It is true that taxing the value of surface area has fewer problems in a global economy. It is not however, without some problems.

Land and natural resources were capitalized in a manner that is no different than theft by pirates, the only difference is that it was the government and elites that did the pirating.

Despite being very inequitable, the current system has its advantages. The various aspects and a discussion of each follows:

PRIVATE OWNERSHIP allows for flexibility that is more and more necessary as the rate of change increases. Even goergists/geolibertarians do not wish to nationalize land.

ABILITY OF LAND OWNERS TO HOLD OUT: I’m not so sure this is advantageous, but I wonder if there is another side to this story. Would a 95-99% tax make land owners who cannot move there property too much at mercy of the jurisdictions they are in and the organizations and people around them?

MARKET CAPITALIZATION: In nations and regions of anarchy (or more like chaos, which is quite different) it isn’t possible to use the market value of real estate as security for loans. This seems to interfer with economic development, or so today’s conventional wisdom goes.

When support for the new convention center collapsed, so did the hopes of developing Scranton Peninsula, a scrubby thumb of land in the Cuyahoga River valley. The 70-acre cape has an industrial past, an almost nonexistent present, and the potential to be an invigorating downtown neighborhood.

Forest City had hyped similar plans in 1989, after it gained control of much of the property, but nothing happened.

It’s a story told often in Cleveland and elsewhere: Developer doesn’t get everything he wants; developer takes ball in bony, liver-spotted clutches and goes home. Cities are left to grovel, offering tax abatements like dowries for a homely daughter.

The hoarding of Scranton Peninsula may prove his point. According to the city’s calculations, Forest City and other speculators pay $436,000 in annual property taxes — a pittance for acreage nearly the size of the CSU campus and within walking distance of several downtown attractions. Ronayne, for one, is frustrated by the system that puts Cleveland’s best assets in cold storage for the benefit of a few opportunists. “The worst thing in the world is decades of squatting, waiting for a building boom that transcends our generation.”

“The powers defined herein as the ‘initiative’ and ‘referendum’ shall not be used to pass a law authorizing any classification of property for the purpose of levying different rates of taxation thereon or of authorizing the levy of any single tax on land or land values or land sites at a higher rate or by a different rule than is or may be applied to improvements thereon or to personal property.” (Ohio Constitution §2.01e)

More commentary later on why it may be better to work around the current system anyways.